Fibonacci Retracements

This graphic indicator is useful for establishing support and resistance zones within a defined period (with the help of two points).

After a significant movement (upward or downward), prices will often bounce and retrace a portion of their original movement close to the Fibonacci retracement levels.

Fibonacci retracements are displayed by drawing a tendency line between two extreme points. A series of horizontal lines will then appear (0.0%, 23.6%, 38.2%, 50.0%, 61.8%, 100%, 138.2%, 161.8%) which represent the percentage of corrections that you can look out for.

Example of a trade

 

Fibonacci Retracement

1) After the rebound has been confirmed:

- A long position is taken at 204.50

- Stop loss at 204.10 below the 61.8% support level

2) At the 38.2% support level

- Locking in of profits by moving the stop level up to 204.60

- Afterwards, let your gains run up

- Or take in your profits at the 38.2% or 23.6% support levels

- In my case, I took my profits at 205.40, a nice 90 pip gain win

Fibonacci Retracement 2

The 50% retracement is the one that is most commonly used.

50% retracement

Fibonacci Retracements calculator

B  
23.6%
38.2%
50.0%
61.8%
78.6%
A
138.2%
161.8%
      161.8%
     138.2%
A  
      78.6%
      61.8%
      50.0%
      38.2%
      23.6%
B      
     

Video demonstration